Two units of a good are sold at $10.00 each and three units of the good are sold at $9.00 each. The marginal revenue from the third unit sold is:
A) -$1.00.
B) $2.00.
C) $7.00.
D) $19.00.

Question

Quizplus · Accepted Answer

Marginal revenue (MR) is the additional revenue that one more unit of a product will bring. It's calculated as the change in total revenue divided by the change in quantity sold. Here, selling the first two units at $10 each brings in $20 total. Selling three units at $9 each brings in $27 total. The change in total revenue from selling the third unit is $27 - $20 = $7, making the marginal revenue of the third unit $7.

Two Units of a Good Are Sold at $10